A personal loan is one that an individual can opt for in case a loan for that specific need is not already listed as one of the loan options by a bank. For example, banks usually offer home loan, car loan, bike loan, education loan, wedding loan and business loans.

Loans for all other purposes, like a vacation, etc can be financed by opting for a personal loan. The interest rates charged by banks for a personal loan are usually higher than interest rates for all other kinds of loans. This is because a personal loan is unsecured loan and isn't guaranteed by a collateral as is the case with other loans. A personal loan is an all purpose loan and is given with minimum documentation. The maximum time limit for a personal loan is around 60 months or 5 years.